Computers are often used to facilitate trading of securities. Many financial institutions record their orders to purchase or sell securities in computerized order management systems (OMSs). The orders in the OMS may then either be manually or electronically transmitted to other sources for finding potential matches and executing transactions, such as registered broker-dealers, electronic trading marketplaces (ETMs), or to other financial institutions or market intermediaries.
One problem which may arise in securities trading is that traders may not be able to execute large-volume trades without unduly affecting the market price of the traded security. For example, an institutional trader may wish to alter the contents of their investment portfolios in response to market conditions by selling a large amount of a given stock. Locating one or more parties to trade a large amount of securities with may not be possible without excessive publicity being drawn to the sale, which may cause the market price to drop. Further, if a number of people become aware of the large transaction before it is executed, it may induce speculation by the number of people and they may try to sell their own shares of the stock prior to the handling of the large transaction, further resulting in a price drop.
Existing strategies for offsetting this problem include spreading out trade orders for a large quantity of a security into small orders, sometimes over several trading days, and spreading the orders among several different electronic markets. These strategies may require more effort and overhead costs on the part of a trader, as well as limiting the possible matches that can be found for a given order. For example, if a trader breaks up an order to purchase 300,000 shares of a given stock into 10 smaller orders for 30,000 shares, the trader may not be able to successfully trade with a seller looking to sell at least 200,000 shares. Further, these smaller orders are usually placed into electronic marketplaces with price limits to prevent trading if the marketplace fluctuates unfavorably. Such limit orders demand the attention of the trader regardless of whether a seller is found.
Therefore, there is a need in the art for an electronic trading marketplace that does minimizes intervention required from traders or other parties, and features the benefits of anonymity and the capability to move large amounts of securities. Specifically, a need exists for an ETM that facilitates the confidential and anonymous discovery of a qualified counterparty for an order. Within such a system, a need may also exist for a trader to confidentially determine the trade quantity given his or her assessment of the market at that time.